Daily update
Daily update
- The health of the US labor market is very important to the US economy. US consumers are supporting growth only because they are using savings and credit to offset catastrophically negative real incomes. They are prepared to use savings and credit because they have job security. If that job security is lost, then the US would move abruptly from slowdown to slump as spending suddenly stops.
- This should make today’s US August employment report extra important. Unfortunately, we can say with complete confidence that the data will be wrong. Firms are reporting a boom in hiring. Workers are reporting no hiring at all. Markets will react in a Pavlovian fashion to the headlines, but this is a blurred image of the US labor market today.
- US July durable goods and factory goods orders are due. The ISM sentiment survey signaled falling manufacturing orders, but it signaled falling orders in June too (and orders boomed then). Production is feeding the rapid global growth in inventories as consumers slow demand for goods.
- Euro area producer price inflation for July will be energy price inflated. Most sectors seem to be able to raise prices far faster than they are increasing wages (producer prices are the prices most firms receive, not consumer prices).
